Rodgers noted that the large tanker market at the end of 2013 was very positive. “The most important thing about that market wasn’t the rates but the fact there was tension in the market we hadn’t expected and the market was much tighter on supply and demand than anyone had expected, we saw the return of the most important thing in shipping at the end of last year and that is volatility,” Rodgers told the Tradewinds Shipowners Forum at Posidonia 2014.
However, he also warned that if individual owners rush out and order large numbers of newbuildings looking to gain an advantage by having efficient modern tonnage they could ruin the market for everybody.
“What we all have to understand is if you build too many ships you kill everybody, you don’t just kill yourself. There is no inter-competitive advantage if you oversupply the market, this is a lesson that was taught in the 70s that people tend to forget.
“If anybody gets carried away and thinks this is a boom and gets carried away and we will build 100 ships because they are better than everyone else’s ships you’re all earning nothing for the next 10 – 15 years and this will be what has always been – a great market for capital destruction,” he warned.
Instead he urged the shipowners to work cooperatively with the fleet they have at the moment to make modest returns on capital, before thinking about the future.
Where supply has outstripped demand as it did 2013 owners have found themselves accepting negative freight rates just to keep their ships moving.
Richard Fulford-Smith managing partner of RS Platou was blunt in his assessment: “You shift cargo for nothing and that’s really embarrassing as you ship cargo for oil companies that could probably afford to pay you”
Looking at the current VLCC market where there is a surplus of ships he said said, “cargo is of course king”. At present there are roughly 150 VLCCs available per month compared to 125 – 140 cargoes.
Looking ahead Fulford-Smith said: “We know there are roughly 100 VLCCs to come….at the end of day you’ve virtually got scrap every ship built up to about 2000 to get us back into balance, assuming the shipbuilders are about to drop prices to build ships people really don’t want.”
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